Timber Mart-South Market News Quarterly
1st Quarter 2011 -- Vol. 16 No. 1-A
Timber Mart-South Market News Quarterly Abridged Version
The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions for Timber Products of the US South Copyright © 2011 by Timber Mart-South, Inc.
Tom Harris, Publisher (706)542-2832 (706)542-4756 Jacek Siry, Research Editor Sara Baldwin, Robert Simmons & Jonathan Smith, Editors Staff: Lee Lewis, Garrett Mack, Stephen Smith and Justin Wright Mailing address: Timber Mart-South, 1860 Barnett Shoals Road, PMB 103-598, Athens, GA 30605. Phone: (706)542-4756 • Fax: (706)542-1670 • E-mail: [email protected] Web site: www.TimberMart-South.com Copyright © 2011:
This publication is copyrighted under the statutes of the United States. The compilation of facts and information herein contained are the subject of private property rights of the publisher. Reproduction or transmission, either manually or electronically, in whole or in part, without express permission of the owner or other unauthorized use, is not permitted. Publisher provides the information herein as a convenience to its readers. Publisher does not represent or endorse the truth, accuracy, reliability or completeness of any of the information contained in this publication. PUBLISHER PROVIDES THE INFORMATION IN THIS PUBLICATION ON AN ‘AS IS’ AND ‘AS AVAILABLE’ BASIS, WITH NO WARRANTIES WHATSOEVER. THOSE WHO USE PRICES PUBLISHED HERIN FOR A SPECIFIC PURPOSE, SALE OR CONTRACT DO SO AT THEIR OWN RISK. UNDER NO CIRCUMSTANCE WILL PUBLISHER HAVE ANY LIABILITY FOR ANY LOSS OR DAMAGE WHATEVER CAUSED BY ANY READER’S RELIANCE ON INFORMATION OBTAINED THROUGH THIS NEWSLETTER.
ISSN 1945-4082A The University of Georgia Warnell School of Forestry & Natural Resources is under contract with the Frank W. Norris Foundation to compile and publish the TMS Market News.
Table of Contents of the Abridged Version Prices & Market Conditions ....................................................................................................3 Stumpage Prices, Reporter Comments Market Indicators ....................................................................................................................4 Lumber & Panel Indicators, US Building Construction, Pulp & Paper Indicators, Energy & Carbon Markets, Equity Markets, Manufacturing Activity Timberland Transactions .......................................................................................................13 Openings & Closings .............................................................................................................15 Biofuel & Bio-Energy.............................................................................................................16 Restructuring .........................................................................................................................16 Weather Etc...........................................................................................................................18
For a the full issue, please contact us or order http://www.tmart-south.com/tmart/subscrib.htm Please see our advertisers’ section; see a list on page 18.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Timber Mart-South Market News Quarterly 1 st Quarter 2011 – Vol. 16 No. 1-A
South-wide Pine Stumpage Prices quarterly averages $50
Prices & Market Conditions
Sawtimber
South-wide timber markets were nearly unchanged this quarter. Average prices for the five major products changed only pennies per ton compared to last quarter. However, all five were well below prices in the same period last year when there were hefty price increases. In the 1st Quarter of 2010 unusually wet weather combined with short-term government policy to boost sawtimber and pulpwood stumpage prices. This quarter’s prices reflected a relatively stimulus-free timber market.
$/ton
$40 $30
Chip-n-saw
$20 Pulpwood
$10 $0 2006
2007
2008
2009
2010
2011
2012
Tim ber Mart-South
South-wide Hardwood Stumpage Prices quarterly averages
$30
South-wide Average Stumpage Prices $/ton
$25
one quarter
$20
1Q 11
4Q 10
%∆
1Q 10
%∆
$25.94
$25.62
+1.2%
$29.00
-10.6%
Note: for a table of the five major products, please see our full News Quarterly. Order or subscribe at http://www.tmart-south.com/tmart/subscrib.htm
$/ton
Pine Sawtimber
year ago
$15
Mixed Hardwood Sawtimber
$10 $5
Pulpwood
$0 2006 2007 2008 2009 2010 2011 2012 Tim ber Mart-South
Pine Stumpage Prices The south-wide average pine sawtimber stumpage price increased for the first time since the 2nd Quarter 2010 but remained $15 per ton lower than five years ago. Pine pulpwood stumpage also turned upward slightly, after falling for three consecutive quarters from the peak a year ago when prices were the highest since 1st Quarter 1998. Pine chip-n-saw continued to ease downward slightly this quarter.
Page 3
Hardwood Stumpage Prices The south-wide hardwood sawtimber stumpage price dipped again this quarter, following a trend similar to hardwood lumber prices (see page 6). Hardwood pulpwood stumpage prices were steady this quarter after falling for the three previous quarters from the record high set a year ago. Note: Timber Mart-South Summary and State reports have average stumpage and delivered prices, two regions per state. The Timber MartSouth Supplemental Report contains average harvest
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
rates as wells as biomass fuel and other special product prices. For details on biomass and residual prices, see the Timber Mart-South Supplemental Report.
Selected Reporter Comments 1Q 2011: Weak markets. We’re in a big squeeze: low delivered prices and fuel costs are going up, with no fuel adjustments. Delivery specifications are getting tighter.
Market Indicators Events of this quarter promise to affect market conditions for months if not years to come. Yearend results for 2010 showed that the past year was stronger than 2009, but still disappointing. This quarter, rising commodity and food prices began to recall the great commodity and oil price increases of 2008. The US and world economy continued to grow but disasters intervened, as did a revolutionary fervor, termed by some “Arab Spring”. Beginning with riots in Tunisia over high food prices and unemployment, political unrest spread to Egypt where protest affected regimechange in early February. Focus shifted to Libya where use of government force sparked a civil war and provoked international intervention. This unrest was only compounded by a series of natural disasters that began in January, topped off by Japan’s monster quake and tsunami in early March.
Lumber & Panel Indicators The Random Lengths Framing Lumber Composite (FLC) price ended March at $291 per thousand board feet (mbf), almost unchanged from the end of December 2010, but down about 9 percent from the spike at the end of March in 2009. The Southern Pine Composite was more volatile, ending the quarter at $284 per mbf, up 6 percent for the quarter but down 17 percent from last March. Random Lengths Framing Lumber Composite $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
291
293
-0.7%
319
-8.8%
Random Lengths Southern Pine Composite $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
284
267
6.4%
343
-17.2%
Random Lengths Framing Lumber Weekly Composite Price ($/mbf)
$500 $390 $280 $170 2006 2007 2008 2009 2010 2011 2012
Southern pine 2x4 lumber continued to enjoy stronger markets than 2x10s. Prices for smaller dimension lumber increased as the quarter progressed, while prices for larger dimension lumber were nearly flat. The Structural Panel Composite price ended March at $304 per thousand square feet, 3/8 inch basis (msf), up for the quarter but down compared to last March when panel prices had spiked along with lumber prices. Random Lengths Structural Panel Composite $/msf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
304
289
5.2%
358
-15.1%
$575 $450 $325 $200
Random Lengths Structural Panel Weekly Composite Price ($/msf)
2006 2007 2008 2009 2010 2011 2012
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Southern pine plywood prices improved more than the Panel Composite this quarter while Southern Oriented Strand Board (OSB) prices followed the overall panel market trend. The Hardwood Review US Kiln Dried Hardwood Lumber Index was $1,103 per thousand board feet (mbf) at the end of the quarter, down quarter-over-quarter and yearover-year after a rise and fall in mid-2010.
Southern panel production remained slow in 2010 according to the APA Engineered Wood Association although combined OSB and plywood production was up slightly over 2009. Southern OSB production was up but Southern Plywood production was down from 2009 levels in 2010, continuing a long-term decline. Southern OSB Production billion sf 2010 8.30
2009
% +/-
2006
% +/-
7.79
6.5%
11.21
-26.0%
Southern Plywood Production billion sf
Hardwood Lumber Price Kiln dried Index $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
2010
2009
% +/-
2006
% +/-
1103
1141
-3.3%
1132
-2.6%
5.73
5.82
-1.4%
9.31
-38.4%
Hardwood Review Kiln-Dried Hardwood Weekly Lumber Index ($/mbf)
$1,500 $1,300 $1,100 $900 2006 2007 2008 2009 2010 2011 2012
24
APA Engineered Wood Association US Southern Panel Production (Annual billion sf, 3/8" basis)
16 8 0 2000
Softwood lumber production was near decade lows in 2010, but up slightly compared to 2009. The Southern Forest Products Association (SFPA) reported that southern pine lumber production in 2010 totaled 12.25 billion board feet (bbf), an increase of about 4 percent over the 11.79 bbf produced in 2009. For more detail on mill activity this quarter, see Openings & Closings on page 22.
2002 2004 S. Plywood
2006
2008 2010 S. OSB
Southern Pine Lumber Shipments billion bf 2010
2009
% +/-
2006
% +/-
12.25
11.79
3.9%
18.57
-34.0%
SFPA Annual Southern Pine Lumber Production (bbf)
20 15 10 5 0
2000
Page 6
2002
2004
2006
2008
2010
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
US Building Construction According to the US Census, housing starts increased in 2010 over 2009 but remained at historically low levels, far below the peaks of 2005 and 2006.
US Census Bureau Residential Improvements (Billion US$ annually) $180 $120 $60 $0
US Residential Housing Starts, 000 units
2000
2010
2009
% +/-
2006
% +/-
587
554
6.0%
1801
-67.4%
South Residential Housing Starts, 000 units 2010
2009
% +/-
2006
% +/-
298
279
6.8%
910
-67.3%
US Census Bureau US Housing Starts (Annual million)
2.5 2.0 1.5 1.0 0.5 0.0
2000
2002
2004
2006
2008
2004
2006
2008
2010
Remodeling activity weakened this quarter, though. Expenditures for the first two months of 2011 were $13.8 billion, down nearly 10 percent from $14.5 billion for the same period in 2010. http://www.census.gov/const/www/c30index.html
2010
Total US privately-owned housing starts fell further this quarter. Through February 2011, US starts were 72 thousand units, down 7 percent from the same period in 2010. Weak markets were compounded by severe winter weather, slow residential sales, and a heavy backlog of unsold houses still on the market. http://www.census.gov/const/newresconst.pdf http://www.census.gov/const/newressales.pdf Expenditures on residential remodeling were slightly higher in 2010 than in 2009 according to the US Census. Such improvements did not fall from the peak in 2006 as did new residential building construction. As a result, remodeling continues to support markets for building products at levels close to those in 2004.
According to the Harvard University Leading Indicator for Remodeling Activity (LIRA), the initial drop at the beginning of 2011 will be followed by increased spending on improvements through the rest of the year. As a result, total remodeling expenditures should exceed those in 2010. http://www.jchs.harvard.edu/media/lira/ Mortgage activity continued to be slow this quarter according to the Mortgage Bankers Association (MBA). Refinancing fell off whenever mortgage rates increased and higher credit standards made qualifying for loans more difficult. Mortgage rates, having recovered from historic lows in late 2010, remain at levels about the same as a year ago. The March average for 30-year fixed-rate mortgages was 4.84 percent according to the Federal Home Loan Mortgage Corp. (Freddie Mac). 30-year Fixed US Mortgage Rates (percent) Mar-11
Dec-10
Δ +/-
Mar-10
Δ +/-
4.84
4.71
0.13
4.97
-0.13
US Improvement Expenditures (Billion $) 2010
2009
% +/-
2006
% +/-
114.6
112.0
2.3%
144.9
-20.9%
8.0 7.0 6.0 5.0 4.0 2006
Page 7
2002
Freddie Mac 30-year Fixed US Mortgage Monthly Average Rates (percent)
2007
2008
2009
Timber Mart-South ~ Abridged Market News Quarterly
2010
2011
2012
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
The Federal Reserve Open Market Committee (FOMC) maintained the federal funds rate at zero to 0.25 percent again this quarter, unchanged since December 2008. The committee reported that economic recovery was continuing slowly, but unemployment remains elevated so inflation is low. The Federal Reserve continues to reinvest principal payments from its securities in Treasury notes. A program to purchase about $75 billion per month of longer-term Treasury securities that began in November is scheduled to end in June.
Pulp & Paper Indicators US paper and paperboard production this quarter remained at about the same level as the 1st Quarter of 2010 according to the American Forest and Paper Association (AF&PA). Year-to-date production through February has still not recovered to 2008 levels. For more detail on mill activity this quarter, see Openings & Closings on page 20. AF&PA Production million tons y-t-d
AF&PA US Annual Pulp Production million tons
75 60 45 30
2000
2002
2004
2006
2008
2010
The AF&PA 2010 Capacity Survey released in March showed that US paper and paperboard capacity declined 3.1 percent in 2010 to 91.05 million tons. A total of 22 machines and 12 mills were classified as permanently closed and removed from the Survey base during 2010. Another seven machines and two mills are expected to permanently close during 2011 and total capacity will contract about 1.4 percent in 2011. Softwood pulp prices increased this quarter, both quarter over quarter and year over year. The FOEX Ltd. Northern Bleached Softwood Kraft (NBSK) pulp price index ended March at $977 per ton, reflecting increases of about $30 per ton. Bleached hardwood kraft pulp prices, at $849 per ton, ended the quarter unchanged from December. Both were up from March of 2010.
Feb-11
Feb-10
% +/-
Paper
5,537
5,673
-2.4%
P-Board
7,721
7,517
2.7%
29-Mar-11
28-Dec-10
% +/-
30-Mar-10
% +/-
Total
13,258
13,190
0.5%
977
949
3.0%
889
9.9%
29-Mar-11
28-Dec-10
% +/-
30-Mar-10
% +/-
849
849
0.0%
789
7.6%
8,600
FOEX NBSK Index $/ton
FOEX BHK Index $/ton
AF&PA Paper & Paperboard Production monthly 000 tons
7,600 6,600 5,600
$1,100
2006 2007 2008 2009 2010 2011 2012
US pulp production in 2010 more or less tracked paper and paperboard production. There was a slight increase over 2009 but levels remained below those before the recession.
FOEX Ltd. NBSK Pulp Index dollars per ton
$900 $700 $500 2006
2007
2008
2009
2010
2011
2012
AF&PA US Pulp Production - Million gr. tons 2010
2009
% +/-
2006
% +/-
54.2
52.1
4.0%
58.7
-7.6%
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Recovered corrugated container prices dropped about $20 per ton this quarter. According to Official Board Markets, Old Corrugated Container (OCC) monthly average prices in the South were $135 per ton in March, down from prices last quarter and a year ago. Old Corrugated Containers - US South in $/ton Mar-11
Dec-10
% +/-
Mar-10
% +/-
135
155
-12.9%
153
-11.5%
Official Board Markets U.S. Southern OCC Prices (dollars per ton)
200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012
Energy & Carbon Markets Fuel prices continued to climb for the second straight quarter after remaining virtually unchanged for the previous six months. The March 2011 monthly average Gulf Coast diesel price was $3.84 per gallon, up 20 percent for the quarter and 33 percent year-over-year. Gulf Coast #2 Diesel – Retail (cents per gallon) Mar-11
Dec-10
% +/-
Mar-10
% +/-
384
318
20.8%
288
33.3%
500
Gulf Coast No 2 Diesel Retail Prices Monthly (cents per gallon) US EIA
350 200 50 2006
2007
2008
2009
2010
2011
2012
http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/psw 18vwall.xls
barrel from $89 per barrel in February 2011, the latest available monthly average. The US Energy Information Agency (EIA) predicts crude oil for US markets will average about $104 per barrel in 2011, with current increases in part due to disruptions in supply from Libya. The European benchmark Brent Crude, which normally trends closely with WTI, rose dramatically, to $104 per barrel in February with spot prices above $115 per barrel in March. W Texas Int Crude Oil (dollars per barrel) Feb-11
Nov-10
% +/-
Feb-10
% +/-
88.58
84.25
5.1%
76.39
16.0%
Europe Brent Crude Oil (dollars per barrel) Feb-11
Nov-10
% +/-
Feb-10
% +/-
103.72
85.28
21.6%
73.75
40.6%
160 120 80 40 0
Crude Oil - W Texas Int Spot Price Monthly (dollars per barrel) US EIA
2006 2007 2008 2009 2010 2011 2012
http://tonto.eia.doe.gov/dnav/pet/xls/PET_PRI_S PT_S1_M.xls Carbon prices were up in Europe this quarter but continue to be nearly non-existent in the US. The European Point Carbon price for the December 2011 vintage was €17.36 per ton on April 4th (about $24.67 per ton), up 30 percent from the end of 2010 and more than 40 percent from April 1st 2010. Analysts attribute the price increase to regulatory changes in the European Union. Spot prices are available at: http://www.pointcarbon.com/news/
Crude Oil prices also increased this quarter provoking expressions of concern about rising energy prices world-wide. Spot prices for West Texas Intermediate Crude (WTI) were at $104 per barrel at the end of March. That is up $15 per
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
The Regional Greenhouse Gas Initiative (RGGI) held its eleventh quarterly auction on March 9th for carbon emissions of utilities in the Northeastern US. The clearing price was $1.86 per CO2 allowance, the minimum reserve price for the auction and unchanged from the previous three quarters. Further detail on results is available at: http://www.rggi.org/docs/Auction_11_Release_Re port.pdf Note: A CO2 allowance represents a limited authorization to emit one ton of CO2.
Equity Markets Stock markets were volatile this quarter. After six months of steadily increasing, the Dow Jones Industrial Average (DJIA) broke through the 12,000 level in January for the first time since 2008 and continued up to a peak of 12,418 on February 18th.
Manufacturing Activity Manufacturing activity continued to expand this quarter. The Institute for Supply Management’s Purchasing Managers Index (PMI) which aggregates activity in US manufacturing was 61.2 in March, indicating continued strong economic growth for the 23rd consecutive month. A PMI above 50 indicates economic expansion, and below indicates contraction. Paper & Paperboard Products followed the rest of the economy, reporting expansion in all three months in the 1st Quarter. Wood Products reported expansion in January and February but was one of only two industries reporting contraction in March. http://www.ism.ws/index.cfm
After the Japanese disaster, a dip briefly took the DJIA below 12,000 again in mid-March, but it had substantially recovered again by the end of the quarter, and closed at 12,320 on March 31st. Dow Jones Industrial Average 31-Mar-11
31-Dec-10
% +/-
31-Mar-10
% +/-
12,320
11,578
6.4%
10,857
13.5%
Dow Jones Industrial Average 13,500 12,000 10,500 9,000 2010
2011
2012
The S&P 500 ended March at 1,325, and the NASDAQ Composite at 2,781. Both followed the same general trend as the DJIA.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Timberland Transactions Timberland markets in the South were quiet this quarter. Of the 1.15 million acres in timberland sales announced in the 1st Quarter, only 8,000 were in the South. The weighted average price per acre was $1,145 nation-wide but prices were not available for the major sales and the average combines prices such as $440 per acre in Maine with $2,440 per acre in Washington.
Page 13
When compared to TMS records since 2000, this quarter’s average price-per-acre for timberland remains below the $1,790 peak of 2007 but above those for the first half of the decade. In March, Timber Mart-South published a summary of transactions since 2000: United States Timberland Markets: Transactions, Values and Market Research: 2000 to 2010. For a description and how to order a copy, see page 40.
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
THANK YOU To our speakers, moderators, sponsors & attendees For making the best conference yet at The Ritz-Carlton Lodge, Reynolds Plantation, Lake Oconee, Georgia, USA On March 23-25 2011
See full agenda with list of moderators and speakers at
www.ugacfb.com/timberlandasset Platinum Sponsors –Forestweb; Hancock Timber Resource Group; Molpus Woodlands Group; Morris, Manning & Martin; Plum Creek; Resource Management Service; Sutherland; Suzano; Timber Mart-South; Timberland Investment Resources & World Forestry Center. Gold Sponsors – CellFor; Davis-Garvin Agency; Finite Carbon; First American Title Insurance; Forest Investment Associates; Forest Landowners Association; The Forestland Group; Forisk; F & W Forestry; Jeffrey M. Siegrist & Company; John Hancock Life Insurance; MetLife Timberland Finance Group; Orbis; Outdoor Underwriters; Raymond James; Rayonier; RMK Timberland Group; J. W. Sewell; Southern Hemisphere Investment Partners; Smith, Gambrell & Russell; Stoel Rives & Weyerhaeuser Company. Friends – Ecoforests; Forest Resources Consultants; Ironshore; & Palmer & Cay. For information on Conference disks, past and present, contact TMS at 706.542-4756
Page 14
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Openings & Closings Changes to capacity and production in the South this quarter occurred mostly in the pulp and paper industry. Lumber and panel manufacturers have kept relatively quiet. Two huge earthquakes hit major industrial centers this quarter, one in Christ Church NZ and the other near Sendai, Miyagi prefecture, Japan north of Tokyo. For more on this and other disasters, see Other News on page 33.
Wood Products: Sawmills US lumber markets remained flat this quarter. One sawmill announced an expansion and another reported repairs after being down after a fire. For more on lumber prices and production levels, see “Lumber and Panel Indicators” on page 6.
Wood Products: OSB & Panels Panel markets also remained slow this quarter.
Pulp & Paper: Production in early 2011 was slightly higher than the same period in 2010 but relatively stable at below pre-recession levels. Two mills in the South will cut paper/paperboard capacity by shutting down paper machines. However, one new machine started up and another manufacturer launched a pulp conversion study. For pulp prices and industry production, see “Pulp and Paper Indicators” on page 8.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Biofuel & Bio-energy
Restructuring
More than thirty new projects have been announced for the South since the beginning of 2010 in spite of weak economic conditions and a less-than favorable regulatory environment. Estimated wood consumption of the current list of 118 plants is about 47 million tons per year.
Some of the biggest announced changes this quarter involved Smurfit-Stone Container and AbitibiBowater which both exited bankruptcy protection last year. Smurfit-Stone was acquired by Rock-Tenn this quarter while AbitibiBowater continues to shift assets and maintain an independent strategy. Meanwhile Russian forest products company Ilim purchased the major Georgia lumber producer, Tolleson, and the beleaguered St. Joe Company is under new management after being taken over by investors.
The TMS list of wood-using biomass energy facilities grew this quarter, but there were ups and downs. Two major pellet mills and one cogeneration facility started operations this quarter; however, the South’s only ethanol manufacturer, Range Fuels, shut down. Three 100Megawatt biomass power plants proposed by Oglethorpe Power in Georgia were cancelled in February. In March, ADAGE put its 50-Megawatt Hamilton County FL project on hold. For current trends in biomass prices, see Prices & Market Conditions on page 5.
Page 16
Service providers Arborgen and Davis-Garvin made structural changes to their organizations, and biomass processor Enviva purchased port facilities in Virginia to facilitate shipping products to Europe. Most of the other merger, acquisition and restructuring events this quarter occurred outside the South.
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Page 17
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Weather, Etc. General Weather: Most of the South experienced “normal” rainfall over the course of the 1st Quarter. Severe winter storms in January and February brought snow and temporary supply chain disruptions to much of the US, including the South. In March, heavy precipitation in a band from New Orleans northeast to Knoxville slightly mitigated drought conditions and a severe Spring fire season. http://www.hprcc.unl.edu/maps/current/ Drought: Extreme drought conditions continued over about half of the South this quarter, with Louisiana, Arkansas and Texas hit the worst.
http://drought.unl.edu/dm/monitor.html Fire: The number of fires and acres burned remained below average year-to-date in the South as well as nation-wide. However, Texas, Georgia and Alabama reported high incidences of wildfires this quarter. At press time, a 40,000 acre fire continued to burn south of Waycross GA. The highest fire potential will remain from Florida and southeastern Georgia to the southeastern half of South Carolina. Fuel loads in Florida are high due to hard freeze conditions this past winter.
Southern Pine Bark Beetle: Drought conditions in Arkansas were blamed for an outbreak of southern pine beetles in the state. Forecast: Normal precipitation levels are expected throughout the South in the 2nd Quarter. Wide temperature swings from below to above normal along with frequent thunderstorm activity could provide some relief in areas with high fire potential. http://www.cpc.ncep.noaa.gov/
List of Advertisers
Page
Arborgen Supertree Seedlings
10
Cellfor Elite Seedlings
8
Davis-Garvin Insurance Agency
17
F&W Forestry
6
Forest Landowners Association
13
Forest Resource Association EXPO 2011
15
Fountains Forestry
12
International Forest Company Seedlings
15
Palmer & Cay
5
Southeast Wood Producers Association
10
Timber Mart-South US Timberland Markets
19
UGA Timberland Investment Conference 2011
14
Weyerhaeuser Seedlings
16
World Forestry Center
13
http://www.nifc.gov/nicc/predictive/outlooks/mont hly_seasonal_outlook.pdf
Page 18
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
New from Timber Mart-South
United States Timberland Markets Transactions, Values & Market Research: 2000 to 2010
Second Edition: 354 pages ¾ Executive Summary of Developments ¾ One Section per Year – new edition covers all of 2010 - top owners, top sellers, top buyers - price ranges - tract sizes ¾ Articles of Interest - 38 timberland-related articles re-printed from Timber Mart-South Market News
- More than 20 well-respected authors ¾ Appendices include - timberland sales tables - timberland inventory and mill maps Order now: $500 per copy Contact: [email protected] or go to: www.timbermart-south.com Subscribers, please ask about available discounts
Page 19
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Timber Mart-South Market News Quarterly Abridged Version
The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions for Timber Products of the US South Copyright © 2011 by Timber Mart-South, Inc.
Tom Harris, Publisher (706)542-2832 (706)542-4756 Jacek Siry, Research Editor Sara Baldwin, Robert Simmons & Jonathan Smith, Editors Staff: Lee Lewis, Garrett Mack, Stephen Smith and Justin Wright Mailing address: Timber Mart-South, 1860 Barnett Shoals Road, PMB 103-598, Athens, GA 30605. Phone: (706)542-4756 • Fax: (706)542-1670 • E-mail: [email protected] Web site: www.TimberMart-South.com Copyright © 2011:
This publication is copyrighted under the statutes of the United States. The compilation of facts and information herein contained are the subject of private property rights of the publisher. Reproduction or transmission, either manually or electronically, in whole or in part, without express permission of the owner or other unauthorized use, is not permitted. Publisher provides the information herein as a convenience to its readers. Publisher does not represent or endorse the truth, accuracy, reliability or completeness of any of the information contained in this publication. PUBLISHER PROVIDES THE INFORMATION IN THIS PUBLICATION ON AN ‘AS IS’ AND ‘AS AVAILABLE’ BASIS, WITH NO WARRANTIES WHATSOEVER. THOSE WHO USE PRICES PUBLISHED HERIN FOR A SPECIFIC PURPOSE, SALE OR CONTRACT DO SO AT THEIR OWN RISK. UNDER NO CIRCUMSTANCE WILL PUBLISHER HAVE ANY LIABILITY FOR ANY LOSS OR DAMAGE WHATEVER CAUSED BY ANY READER’S RELIANCE ON INFORMATION OBTAINED THROUGH THIS NEWSLETTER.
ISSN 1945-4082A The University of Georgia Warnell School of Forestry & Natural Resources is under contract with the Frank W. Norris Foundation to compile and publish the TMS Market News.
Table of Contents of the Abridged Version Prices & Market Conditions ....................................................................................................3 Stumpage Prices, Reporter Comments Market Indicators ....................................................................................................................4 Lumber & Panel Indicators, US Building Construction, Pulp & Paper Indicators, Energy & Carbon Markets, Equity Markets, Manufacturing Activity Timberland Transactions .......................................................................................................13 Openings & Closings .............................................................................................................15 Biofuel & Bio-Energy.............................................................................................................16 Restructuring .........................................................................................................................16 Weather Etc...........................................................................................................................18
For a the full issue, please contact us or order http://www.tmart-south.com/tmart/subscrib.htm Please see our advertisers’ section; see a list on page 18.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Timber Mart-South Market News Quarterly 1 st Quarter 2011 – Vol. 16 No. 1-A
South-wide Pine Stumpage Prices quarterly averages $50
Prices & Market Conditions
Sawtimber
South-wide timber markets were nearly unchanged this quarter. Average prices for the five major products changed only pennies per ton compared to last quarter. However, all five were well below prices in the same period last year when there were hefty price increases. In the 1st Quarter of 2010 unusually wet weather combined with short-term government policy to boost sawtimber and pulpwood stumpage prices. This quarter’s prices reflected a relatively stimulus-free timber market.
$/ton
$40 $30
Chip-n-saw
$20 Pulpwood
$10 $0 2006
2007
2008
2009
2010
2011
2012
Tim ber Mart-South
South-wide Hardwood Stumpage Prices quarterly averages
$30
South-wide Average Stumpage Prices $/ton
$25
one quarter
$20
1Q 11
4Q 10
%∆
1Q 10
%∆
$25.94
$25.62
+1.2%
$29.00
-10.6%
Note: for a table of the five major products, please see our full News Quarterly. Order or subscribe at http://www.tmart-south.com/tmart/subscrib.htm
$/ton
Pine Sawtimber
year ago
$15
Mixed Hardwood Sawtimber
$10 $5
Pulpwood
$0 2006 2007 2008 2009 2010 2011 2012 Tim ber Mart-South
Pine Stumpage Prices The south-wide average pine sawtimber stumpage price increased for the first time since the 2nd Quarter 2010 but remained $15 per ton lower than five years ago. Pine pulpwood stumpage also turned upward slightly, after falling for three consecutive quarters from the peak a year ago when prices were the highest since 1st Quarter 1998. Pine chip-n-saw continued to ease downward slightly this quarter.
Page 3
Hardwood Stumpage Prices The south-wide hardwood sawtimber stumpage price dipped again this quarter, following a trend similar to hardwood lumber prices (see page 6). Hardwood pulpwood stumpage prices were steady this quarter after falling for the three previous quarters from the record high set a year ago. Note: Timber Mart-South Summary and State reports have average stumpage and delivered prices, two regions per state. The Timber MartSouth Supplemental Report contains average harvest
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
rates as wells as biomass fuel and other special product prices. For details on biomass and residual prices, see the Timber Mart-South Supplemental Report.
Selected Reporter Comments 1Q 2011: Weak markets. We’re in a big squeeze: low delivered prices and fuel costs are going up, with no fuel adjustments. Delivery specifications are getting tighter.
Market Indicators Events of this quarter promise to affect market conditions for months if not years to come. Yearend results for 2010 showed that the past year was stronger than 2009, but still disappointing. This quarter, rising commodity and food prices began to recall the great commodity and oil price increases of 2008. The US and world economy continued to grow but disasters intervened, as did a revolutionary fervor, termed by some “Arab Spring”. Beginning with riots in Tunisia over high food prices and unemployment, political unrest spread to Egypt where protest affected regimechange in early February. Focus shifted to Libya where use of government force sparked a civil war and provoked international intervention. This unrest was only compounded by a series of natural disasters that began in January, topped off by Japan’s monster quake and tsunami in early March.
Lumber & Panel Indicators The Random Lengths Framing Lumber Composite (FLC) price ended March at $291 per thousand board feet (mbf), almost unchanged from the end of December 2010, but down about 9 percent from the spike at the end of March in 2009. The Southern Pine Composite was more volatile, ending the quarter at $284 per mbf, up 6 percent for the quarter but down 17 percent from last March. Random Lengths Framing Lumber Composite $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
291
293
-0.7%
319
-8.8%
Random Lengths Southern Pine Composite $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
284
267
6.4%
343
-17.2%
Random Lengths Framing Lumber Weekly Composite Price ($/mbf)
$500 $390 $280 $170 2006 2007 2008 2009 2010 2011 2012
Southern pine 2x4 lumber continued to enjoy stronger markets than 2x10s. Prices for smaller dimension lumber increased as the quarter progressed, while prices for larger dimension lumber were nearly flat. The Structural Panel Composite price ended March at $304 per thousand square feet, 3/8 inch basis (msf), up for the quarter but down compared to last March when panel prices had spiked along with lumber prices. Random Lengths Structural Panel Composite $/msf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
304
289
5.2%
358
-15.1%
$575 $450 $325 $200
Random Lengths Structural Panel Weekly Composite Price ($/msf)
2006 2007 2008 2009 2010 2011 2012
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Southern pine plywood prices improved more than the Panel Composite this quarter while Southern Oriented Strand Board (OSB) prices followed the overall panel market trend. The Hardwood Review US Kiln Dried Hardwood Lumber Index was $1,103 per thousand board feet (mbf) at the end of the quarter, down quarter-over-quarter and yearover-year after a rise and fall in mid-2010.
Southern panel production remained slow in 2010 according to the APA Engineered Wood Association although combined OSB and plywood production was up slightly over 2009. Southern OSB production was up but Southern Plywood production was down from 2009 levels in 2010, continuing a long-term decline. Southern OSB Production billion sf 2010 8.30
2009
% +/-
2006
% +/-
7.79
6.5%
11.21
-26.0%
Southern Plywood Production billion sf
Hardwood Lumber Price Kiln dried Index $/mbf 25-Mar-11
31-Dec-10
% +/-
26-Mar-10
% +/-
2010
2009
% +/-
2006
% +/-
1103
1141
-3.3%
1132
-2.6%
5.73
5.82
-1.4%
9.31
-38.4%
Hardwood Review Kiln-Dried Hardwood Weekly Lumber Index ($/mbf)
$1,500 $1,300 $1,100 $900 2006 2007 2008 2009 2010 2011 2012
24
APA Engineered Wood Association US Southern Panel Production (Annual billion sf, 3/8" basis)
16 8 0 2000
Softwood lumber production was near decade lows in 2010, but up slightly compared to 2009. The Southern Forest Products Association (SFPA) reported that southern pine lumber production in 2010 totaled 12.25 billion board feet (bbf), an increase of about 4 percent over the 11.79 bbf produced in 2009. For more detail on mill activity this quarter, see Openings & Closings on page 22.
2002 2004 S. Plywood
2006
2008 2010 S. OSB
Southern Pine Lumber Shipments billion bf 2010
2009
% +/-
2006
% +/-
12.25
11.79
3.9%
18.57
-34.0%
SFPA Annual Southern Pine Lumber Production (bbf)
20 15 10 5 0
2000
Page 6
2002
2004
2006
2008
2010
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
US Building Construction According to the US Census, housing starts increased in 2010 over 2009 but remained at historically low levels, far below the peaks of 2005 and 2006.
US Census Bureau Residential Improvements (Billion US$ annually) $180 $120 $60 $0
US Residential Housing Starts, 000 units
2000
2010
2009
% +/-
2006
% +/-
587
554
6.0%
1801
-67.4%
South Residential Housing Starts, 000 units 2010
2009
% +/-
2006
% +/-
298
279
6.8%
910
-67.3%
US Census Bureau US Housing Starts (Annual million)
2.5 2.0 1.5 1.0 0.5 0.0
2000
2002
2004
2006
2008
2004
2006
2008
2010
Remodeling activity weakened this quarter, though. Expenditures for the first two months of 2011 were $13.8 billion, down nearly 10 percent from $14.5 billion for the same period in 2010. http://www.census.gov/const/www/c30index.html
2010
Total US privately-owned housing starts fell further this quarter. Through February 2011, US starts were 72 thousand units, down 7 percent from the same period in 2010. Weak markets were compounded by severe winter weather, slow residential sales, and a heavy backlog of unsold houses still on the market. http://www.census.gov/const/newresconst.pdf http://www.census.gov/const/newressales.pdf Expenditures on residential remodeling were slightly higher in 2010 than in 2009 according to the US Census. Such improvements did not fall from the peak in 2006 as did new residential building construction. As a result, remodeling continues to support markets for building products at levels close to those in 2004.
According to the Harvard University Leading Indicator for Remodeling Activity (LIRA), the initial drop at the beginning of 2011 will be followed by increased spending on improvements through the rest of the year. As a result, total remodeling expenditures should exceed those in 2010. http://www.jchs.harvard.edu/media/lira/ Mortgage activity continued to be slow this quarter according to the Mortgage Bankers Association (MBA). Refinancing fell off whenever mortgage rates increased and higher credit standards made qualifying for loans more difficult. Mortgage rates, having recovered from historic lows in late 2010, remain at levels about the same as a year ago. The March average for 30-year fixed-rate mortgages was 4.84 percent according to the Federal Home Loan Mortgage Corp. (Freddie Mac). 30-year Fixed US Mortgage Rates (percent) Mar-11
Dec-10
Δ +/-
Mar-10
Δ +/-
4.84
4.71
0.13
4.97
-0.13
US Improvement Expenditures (Billion $) 2010
2009
% +/-
2006
% +/-
114.6
112.0
2.3%
144.9
-20.9%
8.0 7.0 6.0 5.0 4.0 2006
Page 7
2002
Freddie Mac 30-year Fixed US Mortgage Monthly Average Rates (percent)
2007
2008
2009
Timber Mart-South ~ Abridged Market News Quarterly
2010
2011
2012
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
The Federal Reserve Open Market Committee (FOMC) maintained the federal funds rate at zero to 0.25 percent again this quarter, unchanged since December 2008. The committee reported that economic recovery was continuing slowly, but unemployment remains elevated so inflation is low. The Federal Reserve continues to reinvest principal payments from its securities in Treasury notes. A program to purchase about $75 billion per month of longer-term Treasury securities that began in November is scheduled to end in June.
Pulp & Paper Indicators US paper and paperboard production this quarter remained at about the same level as the 1st Quarter of 2010 according to the American Forest and Paper Association (AF&PA). Year-to-date production through February has still not recovered to 2008 levels. For more detail on mill activity this quarter, see Openings & Closings on page 20. AF&PA Production million tons y-t-d
AF&PA US Annual Pulp Production million tons
75 60 45 30
2000
2002
2004
2006
2008
2010
The AF&PA 2010 Capacity Survey released in March showed that US paper and paperboard capacity declined 3.1 percent in 2010 to 91.05 million tons. A total of 22 machines and 12 mills were classified as permanently closed and removed from the Survey base during 2010. Another seven machines and two mills are expected to permanently close during 2011 and total capacity will contract about 1.4 percent in 2011. Softwood pulp prices increased this quarter, both quarter over quarter and year over year. The FOEX Ltd. Northern Bleached Softwood Kraft (NBSK) pulp price index ended March at $977 per ton, reflecting increases of about $30 per ton. Bleached hardwood kraft pulp prices, at $849 per ton, ended the quarter unchanged from December. Both were up from March of 2010.
Feb-11
Feb-10
% +/-
Paper
5,537
5,673
-2.4%
P-Board
7,721
7,517
2.7%
29-Mar-11
28-Dec-10
% +/-
30-Mar-10
% +/-
Total
13,258
13,190
0.5%
977
949
3.0%
889
9.9%
29-Mar-11
28-Dec-10
% +/-
30-Mar-10
% +/-
849
849
0.0%
789
7.6%
8,600
FOEX NBSK Index $/ton
FOEX BHK Index $/ton
AF&PA Paper & Paperboard Production monthly 000 tons
7,600 6,600 5,600
$1,100
2006 2007 2008 2009 2010 2011 2012
US pulp production in 2010 more or less tracked paper and paperboard production. There was a slight increase over 2009 but levels remained below those before the recession.
FOEX Ltd. NBSK Pulp Index dollars per ton
$900 $700 $500 2006
2007
2008
2009
2010
2011
2012
AF&PA US Pulp Production - Million gr. tons 2010
2009
% +/-
2006
% +/-
54.2
52.1
4.0%
58.7
-7.6%
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Recovered corrugated container prices dropped about $20 per ton this quarter. According to Official Board Markets, Old Corrugated Container (OCC) monthly average prices in the South were $135 per ton in March, down from prices last quarter and a year ago. Old Corrugated Containers - US South in $/ton Mar-11
Dec-10
% +/-
Mar-10
% +/-
135
155
-12.9%
153
-11.5%
Official Board Markets U.S. Southern OCC Prices (dollars per ton)
200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012
Energy & Carbon Markets Fuel prices continued to climb for the second straight quarter after remaining virtually unchanged for the previous six months. The March 2011 monthly average Gulf Coast diesel price was $3.84 per gallon, up 20 percent for the quarter and 33 percent year-over-year. Gulf Coast #2 Diesel – Retail (cents per gallon) Mar-11
Dec-10
% +/-
Mar-10
% +/-
384
318
20.8%
288
33.3%
500
Gulf Coast No 2 Diesel Retail Prices Monthly (cents per gallon) US EIA
350 200 50 2006
2007
2008
2009
2010
2011
2012
http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/psw 18vwall.xls
barrel from $89 per barrel in February 2011, the latest available monthly average. The US Energy Information Agency (EIA) predicts crude oil for US markets will average about $104 per barrel in 2011, with current increases in part due to disruptions in supply from Libya. The European benchmark Brent Crude, which normally trends closely with WTI, rose dramatically, to $104 per barrel in February with spot prices above $115 per barrel in March. W Texas Int Crude Oil (dollars per barrel) Feb-11
Nov-10
% +/-
Feb-10
% +/-
88.58
84.25
5.1%
76.39
16.0%
Europe Brent Crude Oil (dollars per barrel) Feb-11
Nov-10
% +/-
Feb-10
% +/-
103.72
85.28
21.6%
73.75
40.6%
160 120 80 40 0
Crude Oil - W Texas Int Spot Price Monthly (dollars per barrel) US EIA
2006 2007 2008 2009 2010 2011 2012
http://tonto.eia.doe.gov/dnav/pet/xls/PET_PRI_S PT_S1_M.xls Carbon prices were up in Europe this quarter but continue to be nearly non-existent in the US. The European Point Carbon price for the December 2011 vintage was €17.36 per ton on April 4th (about $24.67 per ton), up 30 percent from the end of 2010 and more than 40 percent from April 1st 2010. Analysts attribute the price increase to regulatory changes in the European Union. Spot prices are available at: http://www.pointcarbon.com/news/
Crude Oil prices also increased this quarter provoking expressions of concern about rising energy prices world-wide. Spot prices for West Texas Intermediate Crude (WTI) were at $104 per barrel at the end of March. That is up $15 per
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
The Regional Greenhouse Gas Initiative (RGGI) held its eleventh quarterly auction on March 9th for carbon emissions of utilities in the Northeastern US. The clearing price was $1.86 per CO2 allowance, the minimum reserve price for the auction and unchanged from the previous three quarters. Further detail on results is available at: http://www.rggi.org/docs/Auction_11_Release_Re port.pdf Note: A CO2 allowance represents a limited authorization to emit one ton of CO2.
Equity Markets Stock markets were volatile this quarter. After six months of steadily increasing, the Dow Jones Industrial Average (DJIA) broke through the 12,000 level in January for the first time since 2008 and continued up to a peak of 12,418 on February 18th.
Manufacturing Activity Manufacturing activity continued to expand this quarter. The Institute for Supply Management’s Purchasing Managers Index (PMI) which aggregates activity in US manufacturing was 61.2 in March, indicating continued strong economic growth for the 23rd consecutive month. A PMI above 50 indicates economic expansion, and below indicates contraction. Paper & Paperboard Products followed the rest of the economy, reporting expansion in all three months in the 1st Quarter. Wood Products reported expansion in January and February but was one of only two industries reporting contraction in March. http://www.ism.ws/index.cfm
After the Japanese disaster, a dip briefly took the DJIA below 12,000 again in mid-March, but it had substantially recovered again by the end of the quarter, and closed at 12,320 on March 31st. Dow Jones Industrial Average 31-Mar-11
31-Dec-10
% +/-
31-Mar-10
% +/-
12,320
11,578
6.4%
10,857
13.5%
Dow Jones Industrial Average 13,500 12,000 10,500 9,000 2010
2011
2012
The S&P 500 ended March at 1,325, and the NASDAQ Composite at 2,781. Both followed the same general trend as the DJIA.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Timberland Transactions Timberland markets in the South were quiet this quarter. Of the 1.15 million acres in timberland sales announced in the 1st Quarter, only 8,000 were in the South. The weighted average price per acre was $1,145 nation-wide but prices were not available for the major sales and the average combines prices such as $440 per acre in Maine with $2,440 per acre in Washington.
Page 13
When compared to TMS records since 2000, this quarter’s average price-per-acre for timberland remains below the $1,790 peak of 2007 but above those for the first half of the decade. In March, Timber Mart-South published a summary of transactions since 2000: United States Timberland Markets: Transactions, Values and Market Research: 2000 to 2010. For a description and how to order a copy, see page 40.
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
THANK YOU To our speakers, moderators, sponsors & attendees For making the best conference yet at The Ritz-Carlton Lodge, Reynolds Plantation, Lake Oconee, Georgia, USA On March 23-25 2011
See full agenda with list of moderators and speakers at
www.ugacfb.com/timberlandasset Platinum Sponsors –Forestweb; Hancock Timber Resource Group; Molpus Woodlands Group; Morris, Manning & Martin; Plum Creek; Resource Management Service; Sutherland; Suzano; Timber Mart-South; Timberland Investment Resources & World Forestry Center. Gold Sponsors – CellFor; Davis-Garvin Agency; Finite Carbon; First American Title Insurance; Forest Investment Associates; Forest Landowners Association; The Forestland Group; Forisk; F & W Forestry; Jeffrey M. Siegrist & Company; John Hancock Life Insurance; MetLife Timberland Finance Group; Orbis; Outdoor Underwriters; Raymond James; Rayonier; RMK Timberland Group; J. W. Sewell; Southern Hemisphere Investment Partners; Smith, Gambrell & Russell; Stoel Rives & Weyerhaeuser Company. Friends – Ecoforests; Forest Resources Consultants; Ironshore; & Palmer & Cay. For information on Conference disks, past and present, contact TMS at 706.542-4756
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Openings & Closings Changes to capacity and production in the South this quarter occurred mostly in the pulp and paper industry. Lumber and panel manufacturers have kept relatively quiet. Two huge earthquakes hit major industrial centers this quarter, one in Christ Church NZ and the other near Sendai, Miyagi prefecture, Japan north of Tokyo. For more on this and other disasters, see Other News on page 33.
Wood Products: Sawmills US lumber markets remained flat this quarter. One sawmill announced an expansion and another reported repairs after being down after a fire. For more on lumber prices and production levels, see “Lumber and Panel Indicators” on page 6.
Wood Products: OSB & Panels Panel markets also remained slow this quarter.
Pulp & Paper: Production in early 2011 was slightly higher than the same period in 2010 but relatively stable at below pre-recession levels. Two mills in the South will cut paper/paperboard capacity by shutting down paper machines. However, one new machine started up and another manufacturer launched a pulp conversion study. For pulp prices and industry production, see “Pulp and Paper Indicators” on page 8.
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Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Biofuel & Bio-energy
Restructuring
More than thirty new projects have been announced for the South since the beginning of 2010 in spite of weak economic conditions and a less-than favorable regulatory environment. Estimated wood consumption of the current list of 118 plants is about 47 million tons per year.
Some of the biggest announced changes this quarter involved Smurfit-Stone Container and AbitibiBowater which both exited bankruptcy protection last year. Smurfit-Stone was acquired by Rock-Tenn this quarter while AbitibiBowater continues to shift assets and maintain an independent strategy. Meanwhile Russian forest products company Ilim purchased the major Georgia lumber producer, Tolleson, and the beleaguered St. Joe Company is under new management after being taken over by investors.
The TMS list of wood-using biomass energy facilities grew this quarter, but there were ups and downs. Two major pellet mills and one cogeneration facility started operations this quarter; however, the South’s only ethanol manufacturer, Range Fuels, shut down. Three 100Megawatt biomass power plants proposed by Oglethorpe Power in Georgia were cancelled in February. In March, ADAGE put its 50-Megawatt Hamilton County FL project on hold. For current trends in biomass prices, see Prices & Market Conditions on page 5.
Page 16
Service providers Arborgen and Davis-Garvin made structural changes to their organizations, and biomass processor Enviva purchased port facilities in Virginia to facilitate shipping products to Europe. Most of the other merger, acquisition and restructuring events this quarter occurred outside the South.
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Page 17
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
Weather, Etc. General Weather: Most of the South experienced “normal” rainfall over the course of the 1st Quarter. Severe winter storms in January and February brought snow and temporary supply chain disruptions to much of the US, including the South. In March, heavy precipitation in a band from New Orleans northeast to Knoxville slightly mitigated drought conditions and a severe Spring fire season. http://www.hprcc.unl.edu/maps/current/ Drought: Extreme drought conditions continued over about half of the South this quarter, with Louisiana, Arkansas and Texas hit the worst.
http://drought.unl.edu/dm/monitor.html Fire: The number of fires and acres burned remained below average year-to-date in the South as well as nation-wide. However, Texas, Georgia and Alabama reported high incidences of wildfires this quarter. At press time, a 40,000 acre fire continued to burn south of Waycross GA. The highest fire potential will remain from Florida and southeastern Georgia to the southeastern half of South Carolina. Fuel loads in Florida are high due to hard freeze conditions this past winter.
Southern Pine Bark Beetle: Drought conditions in Arkansas were blamed for an outbreak of southern pine beetles in the state. Forecast: Normal precipitation levels are expected throughout the South in the 2nd Quarter. Wide temperature swings from below to above normal along with frequent thunderstorm activity could provide some relief in areas with high fire potential. http://www.cpc.ncep.noaa.gov/
List of Advertisers
Page
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Cellfor Elite Seedlings
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Davis-Garvin Insurance Agency
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F&W Forestry
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Forest Landowners Association
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Forest Resource Association EXPO 2011
15
Fountains Forestry
12
International Forest Company Seedlings
15
Palmer & Cay
5
Southeast Wood Producers Association
10
Timber Mart-South US Timberland Markets
19
UGA Timberland Investment Conference 2011
14
Weyerhaeuser Seedlings
16
World Forestry Center
13
http://www.nifc.gov/nicc/predictive/outlooks/mont hly_seasonal_outlook.pdf
Page 18
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
New from Timber Mart-South
United States Timberland Markets Transactions, Values & Market Research: 2000 to 2010
Second Edition: 354 pages ¾ Executive Summary of Developments ¾ One Section per Year – new edition covers all of 2010 - top owners, top sellers, top buyers - price ranges - tract sizes ¾ Articles of Interest - 38 timberland-related articles re-printed from Timber Mart-South Market News
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Page 19
Timber Mart-South ~ Abridged Market News Quarterly
1st Quarter 2011
